The Charity Finance Group said UK charities collected millions of pounds worth of coppers every year.

“It is a concern,” said Andrew O’Brien, director of policy at CFG. “On the one hand we don’t want the charity sector to be accused of being luddites.

“On the other hand, fundraising conditions are very tight, particularly at the lower end for smaller charities where people are reliant on bucket collections and spontaneous contributions. Charities are coming up with new, innovative ways to fund raise but [traditional collections] are still significant.

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Mandy Johnson, chief executive of Small Charities Coalition which has about 9,200 members across the UK, said that scrapping 1p and 2p coins would raise costs for charities.

“Most small charities rely on donations from individuals for the majority of their fundraising. That’s volunteers asking people to put in their pennies where they can. At the moment, the alternatives to doing it that way are more costly.”

Johnson said that while contactless collection tins were available, they had higher costs.

“If they remove the opportunity for people to give their pennies in the traditional way, they’re raising the cost of fundraising for small charities.”

Nick Macpherson, formerly the most senior civil servant at the Treasury under George Osborne and before him Alastair Darling and Gordon Brown, reacted with dismay at the idea that copper coins might be abolished.

He tweeted: “Campaign to retain the 1p coin starts now. To abolish penny would be to give into inflation and to trash 1,000 years of history.”

Campaign to retain the 1p coin starts now. To abolish penny would be to give into inflation and to trash 1000 years of history. #soundmoney

James Smith, an economist at the City bank ING, said the impact on inflation would be fairly modest, particularly as 1p and 2p coins have limited worth.

“Where prices do change, it’s only really going to be the very low value consumer goods,” he said.

John Hawksworth, chief economist at the accountancy firm PwC said the increasing use of digital payment methods both in shops and online would mean there was a limited impact to the economy from scrapping copper coins. He also suggested that, with digital payments, some shops might choose to leave prices at 99p.

Karl Wilding, director of public policy and volunteering at the National Council for Voluntary Organisations, said: “Giving loose change remains the most popular way to give to charity. As society moves from cash to digital payments we particularly need to help small charities get ready as the people who give pennies today are the people who give pounds tomorrow.”